Software Over Hardware: Apple May Turn To AI As The Big Upgrade On The iPhone 16

In a strategic shift, Apple Inc. AAPL is reportedly betting on software innovations to boost the sales of its forthcoming iPhone 16, as per Mark Gurman of Bloomberg.

What Happened: Bloomberg journalist Mark Gurman reported in his Power On newsletter that the iPhone 16 series won’t have any significant hardware upgrades. Instead, Apple is integrating generative AI features into the new iPhone software to attract consumers.

Information about the specific AI features remains undisclosed. However, considering the recent AI capabilities announced by competitors like Samsung, Apple will likely offer similar features. Other non-AI-related features and improvements are also anticipated.

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Mark Gurman also noted that Apple momentarily paused the development of new iPhone and Mac updates to concentrate on bug fixes, which should result in a highly polished iOS 18 with improved AI features.

Leaked details about the iPhone 16 suggest minor hardware changes like a hardware shortcut button, smaller Dynamic Islands, and a folded zoom camera on the Pro device.

Why It Matters: Apple has been investing heavily in generative AI, with plans to spend over $1 billion annually. A supercharged AI-powered Siri is reportedly being developed for the iPhone 16, signaling a significant shift in the AI race with competitors like Alphabet Inc. GOOG and Microsoft Corp. MSFT.

According to a Morgan Stanley report, Apple is well-positioned to capitalize on the mainstream adoption of AI, surpassing rivals like Google and Microsoft. This strategic shift towards AI could give Apple an edge in the highly competitive smartphone market.

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